Top stories before the bell Wednesday

AbbyDeveney

Pre-Open stocks action

U.S. stock futures slipped before Federal Reserve Board Chairman Alan Greenspan's testimony on Capitol Hill and as Japanese GDP showed that country had slipped into a technical recession. In the U.S., Commerce Department data showed housing starts hit a 21-year high in January.

Broker Action

Pixar Animation
PIXR
was downgraded to "sell" from "neutral" at Banc of America, due primarily to valuation. Shares have risen 32 percent since August, to $90.22 on Tuesday, and above analyst Michael Savner's 12-month price target of $76. To justify a $90 share price, Savner said future Pixar films would have to gross nearly $320 million at the domestic box office, which is 30 percent more than the average of its prior films.

Credit Suisse First Boston upgraded MetLife, Inc.
MET, -2.09%
to "outperform" from "neutral" on the recent deal to buy Travelers Life. CSFB said it had been cautious on MetLife due to potential earnings pressure presented by low interest rates and the flattening yield curve. But after further analysis of the transaction, CSFB said it believes it will give MetLife "enough flexibility to generate double digit earnings growth in the next two to three years, even without a material change in interest rates.

Deutsche Bank raised its rating on Transocean, Inc.
RIG, -3.96%
to "buy" from "hold," saying the deepwater recovery is broadening. The broker said that, with demand strong and visibility building well into 2006, it sees opportunities for term and more meaningful rate improvement in lower specification rigs.

J.P. Morgan upgraded Textron, Inc.
TXT, -2.06%
to "neutral" from "underweight," citing the improving visibility on growth at Bell Helicopter. The broker said that Bell Helicopter represents about 25 percent of Textron's earnings, and sees an attractive story emerging there in the second half of the decade.

UBS downgraded Ryland Group
RYL
to "neutral" from "buy," saying that while it remains positive on the home building sector, it believes Ryland's focus on organic growth in a slowing environment "warrants a multiple more in line with the industry average."

Prudential Equity Group upgraded Nordstrom
JWN, -0.31%
to "neutral weight" from "underweight," saying it believes the company is entering 2005 in a position of strength "that could allow it to acquire potential sites that might become available from the potential industry's consolidation."

Banc of America Securities upgraded Dow Jones
DJ
to "buy" from "neutral," saying the group's flagship newspaper The Wall Street Journal will benefit from a rise in advertising spending in 2005. Analyst John Janedis said there's anecdotal evidence that several technology and financial companies will lift advertising spending in the paper in coming months. Janedis said there's a good likelihood that the Wall Street Journal Online could increase its subscription rate, possibly by $10 to $89. This could add $6 million to $8 million in revenues. Finally, Dow Jones management may be looking to sell off some of its non-core assets like the Soucy Mill or its interest in CNBC International. Janedis lifted his price target on the media group by $2 to $44. Dow Jones is the publisher of this report.

Coca-Cola
KO, -0.74%
reported fourth-quarter earnings of $1.2 billion, or 50 cents per share, up from its year-ago profit of $927 million, or 38 cents per share. Net operating revenue rose 2 percent in the latest three months to $5.26 billion from $5.18 billion in the same period a year earlier. Excluding items, the Atlanta-based soft drink giant earned 46 cents per share in the latest quarter. The average estimate of analysts polled by Thomson First Call was for a profit of 40 cents per share on revenue of $5.19 billion. The company said it's mulling the repatriation of overseas earnings in 2005, estimating the maximum amount at $6.1 billion, and plans to increase its buyback activity to at least $2 billion in 2005. The stock closed Tuesday at $42.65, down 21 cents.

Ultimate Electronics Inc.,
ULTEQ
the Denver retailer of home entertainment and consumer electronics products, said Chief Executive David Workman and two other officials have left the company. Chairman Mark Wattles adds the post of CEO. Jim Marcum, a director with experience as a chief financial officer in retailing, will "take an active role" in financial operations and restructuring, Ultimate said. The company reported that sales for the fourth quarter ended Jan. 31 totaled $195.9 million, down 19 percent from $243.2 million in the year-earlier period. Comparable-store sales fell 19 percent. The company could not estimate how long it would operate under Chapter 11 of U.S. bankruptcy law, and said that after it reorganizes, the common shares would probably have no value. Ultimate's shares closed yesterday up 3 cents at $1.96.

Moody's Corp.
MCO, -1.42%
reported fourth-quarter net income that rose to $122.6 million, or 80 cents per share, from $85.5 million, or 56 cents per share, in the year-earlier quarter. The earnings included a net charge of 1 cent related to a tax issue. The results topped the forecast for earnings of 73 cents per share of analysts polled by Thomson First Call. Revenue for the period climbed 12 percent to $391.6 million, partly on the positive impact of currency. The company sees 2005 net income up in the high single digits. In a separate release, it declared a two-for-one stock split for shareholders of record on May 4 and lifted its quarterly dividend by 47 percent.

IAC/InterActiveCorp
IACI, +0.00%
reported a fourth-quarter loss of $46 million, or 7 cents a share, vs. a profit of $153 million, or 20 cents a share in the same period a year ago. Excluding one-time items, such as acquisition and asset write down-related charges, earnings would have been 33 cents a share, exceeding the average analyst estimate compiled by Thomson First Call of 27 cents. Revenue fell 5 percent to $1.72 billion from last year's $1.81 billion. Shares in the media and travel services company closed Tuesday up 27 cents at $24.

Shares of Ubisoft climbed as the French game publisher said it's in talks with 20 percent holder Electronic Arts for what could be the starting point of a deal between the two.Ubisoft Entertainment shares were up 4.8 percent at 33.19 euros per share in early Paris trade amid a report in the Wall Street Journal saying the companies were in preliminary talks. An Ubisoft spokesman told MarketWatch the company has had "several" talks with EA, but EA's intentions remain unclear.

EnCana Corp.
ECA, -1.41%
said it added more than 3 trillion cubic feet of North American proved reserves during 2004, eclipsing the company's 1.1 trillion cubic feet of production. Proved gas reserves in North America totaled 10.5 trillion cubic feet at year's end, up 24 percent, the Calgary-based energy company said. Part of the addition reflected EnCana's acquisition of Tom Brown Inc. U.S.-traded shares added 9 cents to end at $62.07 Tuesday.

Restaurant operator Outback Steakhouse
OSI, +2.81%
said net income for the fourth quarter fell to $38.7 million, or 50 cents per share, from $45.3 million, or 58 cents per share. Revenue increased 18 percent to $846.3 million. The company said that operating results were below expectations, partly on weaker-than-anticipated sales at its Outback Steakhouse restaurants and a surge in the price of tomatoes from hurricane crop damage.

The Bank of England said U.K. inflation is expected to rise gradually over the next two years, while gross domestic product growth is a little stronger in the near term. Inflation is expected to reach the bank's 2 percent target during the second year and continue to rise a little thereafter, showing an inflation profile "a shade higher" than that seen in the bank's November report.

Reuters Group
RTRSY
the U.K. financial news and data provider, affirmed expectations for the decline in its core revenue to abate to 1.5 percent in the first quarter and for a gradual improvement in the second quarter, citing "good net January sales." Reuters core revenue, or subscription revenue, declined 11.9 percent 2.164 billion pounds in 2004, of which 4.5 percent was due to currency, Reuters said. Looking ahead, Reuters expects 105 million pounds in cost savings this year, bringing total savings in its program to 340 million pounds by the end of 2005. It added 80 million pounds in a restructuring charge this year, higher than expected, it said, as it includes the move of operations within London.

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